Energy Consumption, CO 2 Emissions, Urbanization and Financial Development in Bangladesh: Vector Error Correction Model

Khairul Alom, ANM Meshquat Uddin and Nazrul Islam. (2017). Energy Consumption, CO2 Emissions, Urbanization and Financial Development in Bangladesh: Vector Error Correlation Model, Journal of Global Economics, Management and Business Research, Vol. 9, No. 4, Page 178-189, ISSN No. : 2454-2504

12 Pages Posted: 13 Mar 2023

See all articles by Khairul Alom

Khairul Alom

Southeast University (Bangladesh) - School of Business Studies

A.N.M. Meshquat Uddin

North South University; Southeast University (Bangladesh) - School of Business Studies

Nazrul Islam

Northern University Bangladesh

Date Written: March 7, 2017

Abstract

This paper examines empirical relationship among the variables of financial development, CO2 emissions, urbanization, industrial value addition, agricultural value addition and energy consumption in the context of Bangladesh using the data of 1985-2015. Findings of Johansen co-integration test indicates that long run relationship exists among the variables of ܿCO2 emissions, financial development, urbanization, industrial value addition, agricultural value addition and energy consumption. Whereas, Granger causality results show that unidirectional causality exists among the variables of CO2 emissions to agriculture value addition, CO2 emissions to energy consumption, agriculture value addition to financial development, agriculture value edition to industry value addition, financial development to CO2 emissions, industry value addition to energy consumption. However, this study fails to establish any relationship between ܿCO2 emissions and urbanization, urbanization and energy consumption in short run in the context of Bangladesh. Results of Vector Error Correction Model (VECM) confirm that except financial development all the explanatory variables are statistically insignificant in the short run. However, the error correction term (ECT) is statistically significant and negative sign. This indicates that ܿCO2 emission adjusted 37.60% within the year when deviated from equilibrium and the adjustment speed is significant.

Keywords: Carbon emission; energy consumption; financial development; urbanization; co-integration; VECM.

Suggested Citation

Alom, Khairul and Uddin, A.N.M. Meshquat and Islam, Nazrul, Energy Consumption, CO 2 Emissions, Urbanization and Financial Development in Bangladesh: Vector Error Correction Model (March 7, 2017). Khairul Alom, ANM Meshquat Uddin and Nazrul Islam. (2017). Energy Consumption, CO2 Emissions, Urbanization and Financial Development in Bangladesh: Vector Error Correlation Model, Journal of Global Economics, Management and Business Research, Vol. 9, No. 4, Page 178-189, ISSN No. : 2454-2504, Available at SSRN: https://ssrn.com/abstract=4381658 or http://dx.doi.org/10.2139/ssrn.4381658

Khairul Alom

Southeast University (Bangladesh) - School of Business Studies

Road: 18, House
64, Block: B Banani
Dhaka, 1213
Bangladesh

A.N.M. Meshquat Uddin

North South University

15 Ariful Haque Chowdhury Rd
Bashundhara Residential Area
Bangladesh, Dhaka 1229 1229
Bangladesh

Southeast University (Bangladesh) - School of Business Studies

Nazrul Islam (Contact Author)

Northern University Bangladesh ( email )

Ashkona, Airport
Uttara
Dhaka, 1230
Bangladesh
01755513119 (Phone)

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